Of TARP money and socialism

One of the currents in the economic news these days is about the TARP money the government put into the banks, nominally to recapitalize them. There's starting to be reports of banks giving the money back, and other reports of the government not allowing them to return the money. If you weren't following the story, you might wonder why the government wouldn't want our money back: after all, we're about to pass a budget which puts the country in debt for another $10 Trillion dollars over the next ten years (essentially doubling the realized national debt), and creating an unbearable debt burden that we'll never possibly be able to pay off; you'd think we'd be excited about, or at least interested in, the ability to reduce the crushing outflow of taxpayer money. To understand why the government isn't interested, you have to look at the whole picture.

Back when the government was forcing banks to take TARP money, they had a simple a good reason: if everybody took the money, it would obfuscate which banks needed it to survive, and which were red herrings. This was perceived as good, because if banks were known to be insolvent, there would be an expected backlash against pumping money into them (which they would then turn around and steal through bonuses and whatnot), and they would be less able to borrow from the private sector. So instead of creating a negative stigma around the banks which took the money, the government just forced everyone to take some.

Now, we have an administration which wants to control the industry. Under normal circumstances, this would be infeasible: as Obama astutely noted when talking about the banking bailout, he would have preferred to do a socialist takeover of the entire industry (well, many industries, but banking in this case), but the long-standing negative social perception in America about socialism prevented him from taking his preferred course of action. Now, however, the news media has stirred up a commotion about bonuses and compensation, while the banks have been trying to preserve their bottom lines (at the expense of making idiotic business decisions which the people and the government clamor for), and they have been vilified. Not one to let a crisis go to waste, Obama has capitalized on this to launch full force into a socialist control scheme of every company which has government bailout money (which is most of the banks now, and the major auto companies which would otherwise already have failed due to their horrible business management, but soon will be most companies in the country).

This, of course, has prompted the banks which are not insolvent to try to give the money back. No deal, says the government: we want to control you, and until we have a public mandate to instigate full socialist control of all the industries, we'll have to make due with controlling you because you took government money (which we forced you to take). It's a pretty good scam, and one which only a malicious government could pull off.

So if you're a bank and you don't want to live under the boot of Comrade Obama, what do you do? Well, here's what I could do: get the full amount you owe now, in cash, and put it into escrow for the government to pick up whenever it wants it. Be really public about it: "here's the money", "when you want it", "we stand on our own", etc. Try to turn it into a marketing opportunity as the bank which paid back the TARP money; the public won't really make the distinction between escrow and officially back to the government, and you can try to get an advantage over banks which still have the TARP money. You can also claim you don't have TARP money for regulation purposes either, since it's in escrow and you've relinquished your claim to it. It may not hold up over the long run, but it would be the right thing to do, and a step in the right direction in the fight against the socialist tide, and collapse of the country as we know it.

Meanwhile, the Obamanation marches on, bravely forging the destruction of America, one socialist goose-step at a time.